Facebook, Microsoft and Google collectively employ about 700 people in Iowa, according to information provided by the companies and economic development officials. And the overall data center industry is actually in decline in Iowa, according to federal data.

But state officials last week urged Iowans to look beyond just the numbers of full-time data center employees.

Debi Durham, director of the Iowa Economic Development Authority, said "all eyes are on Iowa for building this technology ecosystem. So it's always unfortunate that we always focus on, 'well, it's just 50 jobs.'"

That agency's board awarded nearly $20 million in tax credits to Apple's data center on Aug. 24. Durham said mega data centers like Apple's serve as the foundation to building a wider "technology ecosystem."

"Data centers at their very essence are powering cutting-edge innovation," she told the Register. "I think they’ve been very fundamental to the growth of the technology industry in the state of Iowa."

But some tech experts question whether such data centers have much of a connection to the local tech community, yet alone a wider economic impact.

Yevgeniy Sverdlik, editor-in-chief of Data Center Knowledge, an online publication covering the data center industry, said economic development officials like the high-tech appearance of projects like Apple's data centers. But they rarely sprout wider tech growth or startup activity, he said.

"A data center alone, or three or five data centers alone, will not create an innovation hub in your community," he said.

'It's a big warehouse with a fence around it'

Sverdlik says other regions around the country that have grown into hubs for mega data centers have not experienced much integration between the giant server warehouses and startups, tech companies or tech investors.

Data centers can recruit technologically minded workers to the area, Sverdlik said, "but they’re there to run the data center."

"I don’t see how a data center is a shot in the arm to the local technology and startup scene," he said. "It’s a big warehouse with a fence around it and hardcore security. It's not a hub of activity."

But state and company officials have sought to tie the cutting-edge innovation of Silicon Valley brands with Iowa's growing collection of big-box data centers.

Standing at the foot of the Iowa Capitol, Apple CEO Tim Cook hailed Iowa as a "new home for innovation in America's heartland."

He mentioned how developers in Iowa have created apps for everything from entertainment to education. And in an interview with The Des Moines Register, he pointed to Iowa Gov. Kim Reynolds' focus on STEM education and careers.

"At Apple, we admire what you guys have accomplished," he said, "and we want to be a part of it."

People photograph Apple CEO Tim Cook during a visit to the West Des Moines Apple Store on Thursday, Aug. 24, 2017. Cook was in Iowa announcing the companies plans for its $1.375 billion data center in Waukee.
Brian Powers/The Register

Apple CEO Tim Cook asks if someone could send him a copy of the team photo they had just taken during a visit to the West Des Moines Apple Store on Thursday, Aug. 24, 2017. Cook was in Iowa announcing the companies plans for its $1.375 billion data center in Waukee.
Brian Powers/The Register

Apple CEO Tim Cook poses for a photo with employees on a visit to the West Des Moines Apple Store on Thursday, Aug. 24, 2017. Cook was in Iowa announcing the companies plans for its $1.375 billion data center in Waukee.
Brian Powers/The Register

At the announcement, Reynolds thanked the Cupertino, Calif.-based company for "reinforcing Iowa's place in the knowledge-based economy."

"Apple will be an active part of our community," she said. "And that's something I simply cannot overstate the significance of."

Jay Byers, CEO of the Greater Des Moines Partnership, said projects like Apple's data center serve as a magnet for tech workers, attracting people to Iowa's startups and legacy companies alike.

"Having Apple and Facebook and Microsoft in this market — with not only significant capital investments, but collectively a number of high-tech jobs — sends a powerful message across the globe that greater Des Moines is now a hub for the tech industry," he said, "and, in many ways, a global leader in the data center industry and as a global center for the cloud."

'There has not been much growth in this industry'

Figures from the Bureau of Labor Statistics Quarterly Census of Employment and Wages show both wages and jobs are declining in the jobs category that includes Iowa's data centers.

Iowa jobs in "data processing, hosting and related services" fell from 7,044 in 2006 to 3,389 in 2016, according to the federal data. State officials said 2017 tallies so far are "almost unchanged" from last year.

For comparison, that statewide number ranks lower than the 4,442 jobs at Nationwide Insurance, the Des Moines area's sixth-largest private employer, according to the Greater Des Moines Partnership.

James Morris, a labor market economist with Iowa Workforce Development, acknowledged that "there has not been much growth in this industry."

But he said the data are imperfect: Officialsmoved some employers out of the industry categorization in recent years. And the federal classification includes jobs in data entry, automated data processing, application hosting and web hosting — divergent fields that could sway the numbers for data center work.

"As such, job gains from data centers could be offset by losses in other industry-related businesses," Morris said. "At least some of the stagnation for employment is because of structural changes in the economy, with businesses becoming less labor-intensive and more technology-driven. This typically requires less manpower."

Thomas Furlong, vice president of infrastructure for Facebook, speaks with Sen. Chuck Grassley, R-Iowa, at an event at the new Facebook data centers on Friday, Nov. 14, 2014, in Altoona, Iowa.
Charlie Litchfield/The Register

Thomas Furlong, vice president of infrastructure for Facebook, listens as speakers make remarks at an event at the new Facebook data centers on Friday, Nov. 14, 2014, in Altoona, Iowa.
Charlie Litchfield/The Register

Between 2014 and 2024, IWD projected 905 new jobs, including 430 in the Des Moines area, would be created in that industry. They expected 225 new jobs, including 80 in the Des Moines area, would be created between 2016 and 2018.

Iowa State University economist Dave Swenson used the employment data to question state claims about growing high-tech jobs in Iowa. A frequent critic of state economic development incentives, Swenson said Iowa is home to a grouping of data center operations, but not in the way that central Iowa boasts a robust cluster of insurance companies.

"The major cluster that we actually have regarding data centers is a collection of pliant, if not incredibly gullible, state and local officials willing to cede hundreds of millions in state and local tax revenues to extraordinarily rich firms in the name of paltry job gains," Swenson said.

'Where do these guys fit?'

While the big companies dominate headlines, Iowa's data center industry is made up of many smaller, lesser-known firms.

"It’s a debate that we’ve had internally and philosophically: Where do these guys fit," said Jeffrey Springborn, chief operating officer of LightEdge Solutions, a technology company that operates data centers in the Des Moines and Kansas City areas.

His company's data centers are "nowhere near the size of a Facebook or a Google," he said. But LightEdge employs about 130 people in Iowa, with dozens more hires projected in the future.

LightEdge operates as a data center landlord of sorts, providing storage and other solutions to many different companies. Data centers from tech giants, though, look more like a "factory of servers," he said.

"It’s a little bit more of a mechanized approach," he said. "They’re looking for cheap land, cheap power and cheap taxes."

Springborn applauded Iowa's recruitment of firms like Apple. But he wonders whether state officials get too enamored with the big names, losing sight of the value of local firms.

Plus, he said, out-of-state tech companies have strained the local talent pool. Facebook, for instance, recruited away "quite a bit of our talent" for its Altoona data center.

"To be honest, there is a thin tech community here," he said. "It's more of stealing resources than it is adding to the resource pile."

By its nature, Google's data center in Council Bluffs only serves Google. The same goes for Microsoft in West Des Moines and Facebook in Altoona.

"It's not the same as providing business applications to multiple customers in the state of Iowa," said Joe Shields, president and co-founder of IP Pathways, another local tech firm offering data center services. "The large data centers likely are not interacting and providing the same type of value with the tech community and organizations they serve as some of the other providers in the region."

But he does welcome Apple's investment in Iowa. And he hopes the state can further integrate it and other mega data center operators into Iowa's tech scene.

"My sincere hope is that the data center is only the first component," he said, "and we continue to discuss with these organizations how we bring more high-value jobs to Iowa."

In Waukee, Apple plans to spend $600 million on computer hardware at its $1.4 billion data center. Plans for the initial 400,000-square-foot first phase call for hiring 50 workers there.

Apple declined to comment for this story, but a company spokesperson pointed out that other data center projects have been followed by expansions, both in the overall site investment and permanent jobs.